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of <h1>Partner denied tax exemption for gold ornament business investment. Lack of control over manufacturing process deemed non-industrial.</h1> The High Court ruled against the partner seeking exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957 for investment in a partnership firm ... Industrial Undertaking Issues: Interpretation of section 5(1)(xxxii) of the Wealth-tax Act, 1957 regarding exemption for investment in a partnership firm engaged in gold ornament business.Analysis:The case involved a partner in a firm engaged in selling gold ornaments claiming exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957 for the investment made in the firm. The Wealth-tax Officer denied the exemption, stating that the manufacturing of gold ornaments was done by an outside agency, not directly involving the assessee. The Appellate Assistant Commissioner also denied the exemption, following a court decision that the firm was not an industrial undertaking. However, the Appellate Tribunal allowed the appeal, emphasizing the assessee's control over the goldsmiths involved in making the ornaments, contrary to the Department's argument that the assessee had no direct involvement in the manufacturing process.In the absence of representation from the assessee, the High Court analyzed the facts. The court noted that the partnership firm was engaged in selling gold ornaments, with the assessee providing gold to goldsmiths for making ornaments and paying their wages. The court considered precedents where similar claims for exemption were allowed based on direct involvement in manufacturing activities. However, the court found that the assessee did not have control over the goldsmiths, leading to the conclusion that the firm was not an industrial undertaking engaged in manufacturing and processing goods. Relying on relevant case law, the court held that since the assessee was not directly involved in the manufacturing process, the Tribunal's decision to grant the exemption under section 5(1)(xxxii) was incorrect.In light of the above analysis, the High Court answered the referred question in the negative, favoring the Department. The absence of representation from the assessee led to no order regarding costs in this matter.
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